03-10-2017 | EYE ON GREECE | EU

Tuesday, October 3, 2017

Draft budget sees revenue gap, new measures

A draft budget for 2018 presented in Parliament on Monday predicted strong growth but also pointed to a significant revenue shortfall this year that is likely to result in nearly 2 billion euros in new austerity measures next year.

Main opposition New Democracy (ND) leader Kyriakos Mitsotakis on Monday took exception to a recent quip by Eurogroup chairman Jeroen Dijsselbloem calling for elections in Greece to be held in 2019, when the current coalition government’s term ends.

The head of the Greek Orthodox Church on Monday criticized the country’s leftist-led government for pushing draft legislation that will allow individuals to freely determine their gender identity irrespective of how it was recorded at birth.

Greece’s Economic Sentiment Index rose last month to its highest point since December 2014, the Foundation for Economic and Industrial Research (IOBE) announced on Monday, reflecting the decline in uncertainty resulting from the implementation of the bailout program and a good year to date in terms of tourism. The manufacturing industry also saw an improvement in its index.

Greece is planning new bond issues in 2018, according to the Finance Ministry’s draft budget released on Monday, which said they will include an exchange of bonds issued under a previous debt write-down in 2012 with new ones. [Reuters]

Greek bank stocks came under selling pressure on Monday as the possibility of the need for additional provisions looms large. While non-banking blue chips appeared at times as if they would manage to contain the benchmark’s drop, the main index ended the first day of the trading week well in the red, with turnover failing to breach the 60-million-euro mark.

RIZOSPASTIS: Bloody surpluses for the capitalists at the expense of the people

KONTRA NEWS: Incriminating tapes of the National Intelligence Service regarding oil smuggling have vanished

DIMOKRATIA: The freeing of abducted businessman Lebidakis is a major success for the Greek Police and boosts citizens’ sense of security

NAFTEMPORIKI: Great expectations regarding the surplus of the 2018 budget

Where there is discord may we bring harmony: If the week started on notes of sharp division and tragedy, today we pause to recognize unity and success: it is Reunification Day in Germany. European Commission President Jean-Claude Juncker told Florian Eder, author of Playbook’s German language sister newsletter Morgen Europa, that “German unity is a gift of history, both thanks to Europe and for Europe. It’s a symbol of what we can achieve by looking at what unites us.” More leaders share their thoughts below.

What might happen if Catalonia declares independence this week? Carles Puigdemont, Catalonia’s president, plans to submit the result of Sunday’s vote for approval to the regional parliament, saying: “There is no other option.” The goal: a unilateral declaration of independence, despite the fact only 42 percent of those eligible voted in the referendum and regardless of accusations of voting irregularities in many polling stations. Associated Press looks at the impact of such a move.

Donald Tusk applies pressure: Spanish Prime Minister Mariano Rajoy spoke to European Council President Donald Tusk Monday afternoon at Tusk’s request. The message from Brussels: “Avoid further escalation and use of force.”

Commission ties itself in knots, annoying nearly everyone: After years of refusing to take a view on the campaign of Catalan separatists (other than to insist it is an internal Spanish matter) the Commission Monday finally confirmed it thought Sunday’s vote was “not legal.” The Commission in a statement said “violence can never be an instrument in politics,” when it obviously already was an instrument used Sunday by various parties, and then refused to condemn police violence in the context of Sunday’s vote, preferring instead to “trust the leadership of Prime Minister Mariano Rajoy to manage this difficult process.” David M. Herszenhorn, Maïa de La Baume and Quentin Ariès write that as Spain falls apart, Europe is tongue-tied.

Catalonia’s representative in Brussels, Amadeu Altafaj, himself a former senior European Commission spokesman, told reporters: “It is also disappointing that during the midday briefing there was not a single word on the 893 people who were injured. These are EU citizens. We are not talking about any country at the end of the world. These are 893 Catalan and EU citizens that were injured.”

Puigdemont demands Spanish police withdrawal: At a press conference Monday, Puigdemont said: “We demand the withdrawal of the state police forces that have been deployed in a country that has always acted peacefully.” He also called for an investigation to alleged abuses of fundamental rights.

EU police officers lobby on the violence and an impossible mission: EuroCOP, the EU’s police officers’ lobby, said in a statement: “We highlight the impossible situation thousands of police officers across Catalonia found themselves in as they were expected to intervene and prevent the referendum from taking place.”

LEGALITY VERSUS JUSTICE: If there’s a theme running through reporting of the Catalan crisis, it is that while most accept the vote had no legal standing, few outside the Madrid government’s core supporters applaud its handling of the situation.

La Vanguardia: “Desolation. We do not believe there is another word more adequate to describe the majority mood of Catalan society at the moment.”

Euractiv Brief: “Catalans had expressed their opposition to a unilateral independence vote in the regional elections framed as a plebiscite in 2015. Still, you cannot send riot police to clear a pyjama party. That is simply unjustifiable. This was the culmination of Rajoy’s mishandling of Catalonia for more than 10 years.”

Counter-view: Tunku Varadarajan writes on POLITICO: “The president of the autonomous regional government of Catalonia finished the day as he had always intended, by heaping scorn on the Spanish state. Amid scenes of tumult and understandably robust police action — which turned swiftly into separatist propaganda in Twitter’s Wonderland — his government held its unlawful referendum.”

COMMISSION — COLLEGE AGENDA: European commissioners meet in Strasbourg to discuss a new package on public procurement, VAT reforms and Tallinn’s digital summit outcomes. Vice President Jyrki Katainen and European Commissioner for the Internal Market Elżbieta Bieńkowska will deliver the readout in the afternoon. Catalonia will be the elephant in the room.

Brexit wording: Juncker and the EU’s Brexit negotiator Michel Barnier join MEPs before they vote on a resolution that will say “sufficient progress” has not been made for phase two of the talks to begin. Parliament President Antonio Tajani and Guy Verhofstadt, the Parliament’s Brexit negotiator, will give a press conference immediately after the vote. Watch it here from 9 a.m.

Egypt relations: In the afternoon, MEPs will debate relations between the EU and Egypt, days after 22 gay men and women were rounded up by authorities, which Amnesty International called “a sharp escalation” in official persecution.

2018 work program: Twenty-two Parliament committee chairs will meet European commissioners to discuss Juncker’s State of the Union address, as well as the Commission’s 2018 work program, which is due to be published October 24. Cecilia Wikström, who leads the Parliament’s committee chairs, is expected to warn commissioners any proposal launched after spring next year may not be signed off before European Parliament elections.

Trade defense: Negotiators representing the EU institutions will hold what is expected to be a final three-way meeting on new rules designed to strengthen the bloc’s trade defense mechanisms. A press conference is set to take place at 4 p.m. with MEP Salvatore Cicu, European Commissioner for Trade Cecilia Malmström and the Estonian presidency’s Väino Reinart.

BANKING — BANCO POPULAR ESPAÑOL DEAL HIDDEN FROM INVESTORS: Bondholders of Spain’s failed Banco Popular Español are suing the EU and were repeatedly denied access to key regulatory documents, according to multiple letters obtained by POLITICO. Initially hailed as the bloc’s first case of a successful bank “resolution,” multiple suits against the EU threaten to undermine trust in the decision, as well as the EU’s post-crisis framework for dealing with failing banks. Full story for POLITICO Pro Financial Services subscribers.

DIGITAL POLITICS — GERMANY’S NEW ONLINE HATE SPEECH CODE PUSHES €50M FINES: Facebook’s motto during its first decade was “move fast and break things,” a common attitude at the digital vanguard that has put leading companies on a collision course with the German government, which prizes social stability. Starting this week, tech companies face fines of up to €50 million if they consistently fail to remove illegal content from their digital platforms within 24 hours. Katy O’Donnell, Joanna Plucinska and Mark Scott on the showdown between Berlin, Silicon Valley and free speech advocates.

INTRODUCING THE POLITICO CABINET: This new, regular project brings together a transatlantic group of decision-makers and thinkers. The first challenge for the group was answering the question: “How to tame Putin.” Maura Reynolds has more.

Key findings:

— To hold on to power, Putin is working to undermine institutions and sow dissent in the West.
— The U.S. is no longer acting like the leader of the free world.
— The greatest Western weak spot now is cybersecurity.

— Pierre Moscovici, EU commissioner for economic and financial affairs, taxation and customs: “German unification paved the way for integration and unity across the European Continent. October 3 is therefore a day of joy, hope and confidence for the whole of Europe. At the same time it reminds us of our collective responsibility to complete the project and remain united.”

— Gianni Pittella, chairman of the S&D group: “This day stands not only for German reunification, but also for the European one — the end of the Cold War and the fall of the Berlin Wall. As progressive European forces we stand together and take this day as an occasion to learn a lesson from the past regarding the importance of democracy, rule of law and human rights.”

— Dimitrios Papadimoulis, vice president of the European Parliament, head of Syriza party delegation: “There are still major challenges to address [in Germany] … The next government in Berlin should therefore contribute to the deepening of EU political unification process, and tackle economic and social grievances in order to convincingly address far-right politics.”

— Green MEP Bas Eickhout from the Netherlands: “After years of stagnation under a grand coalition both in Berlin and Brussels, I hope for an active future-oriented Germany again: creating a socially just society both in Germany and EU.”

— FT’s Berlin correspondent, Stefan Wagstyl, sings the praises of his soon-to-be-former home: “Almost three decades after the end of the Cold War, Berlin remains a fascinating work-in-progress.”

BREXIT 360° …

David Davis dismisses reports he plans to retire after Brexit: This from our sister publication, Jack Blanchard’s London Playbook: David Davis Monday night laughed off stories in the Sun and the Telegraph that he has told friends he will retire in 2019 after Brexit.

Liam Fox in Dubai: The U.K. international trade secretary is in Dubai as part of a three-day trip to further promote the U.K.’s trade links with the region. Dubai is the scene of a 2011 scandal that nearly ended Fox’s political career. He will be in Sharjah on Wednesday before traveling to Qatar.

GERMANY — SOCIAL DEMOCRATS NEED MORE THAN A BIG TIME OUT: Michael Bröning argues that to really recover and win core voters back from far-right and far-left populists, Germany’s Social Democrats need more than a break in opposition.

GERMANY — SCHAÜBLE INTERVIEW: “Our free, democratic system based on the rule of law is so strong that nobody can wreck it, neither from within nor from without. Anybody who tries will fail,” Wolfgang Schäuble, Germany’s departing finance minister who is to become president of the Bundestag, told Bild. He denied he was pushed out of his old job, saying: “I decided before the elections after eight years as finance minister and many years of government responsibility to take on a new task.”

AUSTRIAN ELECTION CATCH-UP …

Parliamentary elections take place October 15 and look set to kick off a week in which two more European Social Democratic governments lose office (the other is in the Czech Republic, which votes October 20-21).

By the numbers: Austrian Chancellor Christian Kern’s Social Democrats (SPÖ) were in third place in a recent poll, at 22 percent, with Sebastian Kurz’s center-right ÖVP on 33 percent and the far-right FPÖ (which nearly won the 2016 presidential election) on 27 percent.

Turkey doesn’t need EU: “In reality, we actually no longer need EU membership, but if the EU wants to make a leap forward there is only one way and that is by granting Turkey membership,” said President Recep Tayyip Erdoğan during a speech to Turkey’s parliament.